Blasé Capital sliding stocks

Yesterday, the shares prices of oil upstream firms like the state-owned ONGC and Oil India slipped by four per cent. The immediate trigger was a slight slide in global crude oil prices, which dipped by a meagre three cents a barrel, or a mere 0.04 per cent. Now, a 0.04 per cent cannot be equated with a four per cent fall, can it? Yet, there is a logic to the market madness. If crude oil prices go down further, it will impact the upstream segment due lower revenues per barrel, tighter margins, lower profits, and reduced expense on future and ongoing exploration projects. The first three will affect the quarterly financials, and the last one will impact earnings in the future. In comparison, lower global oil prices benefit the downstream segment, both the refiners and marketers, as their margins and profits get a boost. Hence, there is a business explanation for the fall in share prices.

Yet, as experts admit and explain, the future of global prices is uncertain. There are both positive and negative factors that have emerged, and will influence them. For example, the India-US bilateral trade treaty, which may be signed in March 2026, will depress the prices due to less disruptions, more clarity on India’s oil imports, even if the sources need to be changed from Russia to others. Higher quantities of Venezuelan will be available, possibly at huge discounts since it is more difficult to refine, and be comparable to the Russian prices. The US will be more than willing to sell more, as this was one of the prime objectives behind the 50 per cent tariffs on Indian goods. Although oil will be more expensive, the global trade will be streamlined. Like any other sector, energy demands predictability. If one is certain who will sell what to whom, prices remain stable despite hiccups.

At the other extreme, the US and Iran, aggressive and bitter rivals, seem to be ready to come to the negotiating table. The Iranian foreign minister said that the two sides have converged on crucial “guiding principles” to resolve the long-standing disputes related to nuclear issues. Although he warned that a final deal is not imminent, the progress signifies a forward movement. This may allow Iran to officially and openly sell oil in the markets, and not surreptitiously via smuggling due to the existing American and western sanctions. The excess supply will depress global oil prices, and impact up-streamers. Some analysts agree that crude oil prices appear to be ready for a ‘technical rebound,’ but feel that the real action will depend on the Iran-US agreement, which remains distant, with the markets wary about the durability of the diplomatic progress. When it comes to Donald Trump, the US president, things can go northwards and southwards in a jiffy.

Russia seems to be on the wrong side of the oil prices equation, and may suffer if India, one of the main importers, buys more from the US, Venezuela, and other sources. But it still has China in the bag. In addition, the US-Ukraine-Russia talks are on and off, either bilaterally or tri-laterally. But Trump desires to end the war, which will enable Russia to openly enter the market, like Iran, and give up ‘shadow trading.’ In addition, there is news that crude output from a field in Kazakhstan, which is among the world’s largest, rose after a production suspension in January 2026. It may reach full capacity in a few days, and pump more oil in the global market. This will further aid lower prices. In any case, if Russia loses the Indian purchases, until the Ukraine issue is settled, it may release more oil in the black market to make up for the revenues, which will indirectly bring down prices.

Now, let us turn to the bad news. As mentioned earlier, the Iran-US nuclear deal is still work-in-progress, and can take months, even a year or more. In fact, according to some analysts, there are better odds of an American attack and military strikes on Iran. One of the analysts gives this a 65 per cent possibility by the end of April 2026. The odds are high, and may derail any diplomatic progress achieved till now. The Russia-Ukraine war will not end soon. The demands from the Russian side are huge in terms of territories, and Ukraine is unlikely to give in because it will mean political hara-kiri. Moreover, Russia’s aims may become more dominant if the western powers get tired, and reduce their support to Ukraine. Indeed, America may take the lead, which will encourage Russia to keep on fighting, and grab more territory. If the war escalates, oil will shoot up, which will benefit Russia.

A recent report by IEA states that the global oil demand is likely to go up in 2026, compared to 2025, with non-OECD nations accounting for the entire increase, and China taking a lead on the country level. However, as a short-term trend, world oil supply “plunged… in January (2026) … as severe winter weather disrupted North American operations, while outages and export constraints curtailed Kazakh, Russian, and Venezuelan flows.” Supply will rebound soon.